Washington (Platts)--16Feb2011/503 pm EST/2203 GMT

US Energy Secreatary Steven Chu faced pushback from Republicans on the Senate Energy and Natural Resources Committee on Wednesday over the Obama administration's efforts to ramp up renewable energy spending and cut oil and gas research in its fiscal 2012 budget request.

The committee's senior Republican, Alaska Senator Lisa Murkowski, said the 12% spending increase for the Department of Energy would be inappropriate under the current deficit spending concerns.

"Like just about every member of this committee, I'm deeply concerned about federal spending," Murkowski said. "To rein in federal spending, we will need to look at every program -- at every agency -- and the Department of Energy is no exception."

"I share the desire to promote clean energy technologies, but given the urgent need to make tough budget decisions, we need to draw a distinction between the programs we want to fund and the programs we need to fund -- and I am not entirely convinced this budget request will move us in that direction," she said.

In the spirit of Obama's pledge to boost funding for "clean energy" initiatives, the budget request provides an overall boost to DOE, increasing its budget 12% over 2010 levels to $29.5 billion. It was sent to Congress Monday. Much of the increase will go to renewable energy research and development, but the fossil-energy office will see cuts to oil and gas research, but will still receive $453 million, primarily for carbon capture and storage technologies.

DOE was one of only several departments -- including Education, Treasury and Defense -- to get a bump-up in spending.

Chu defended his budget as having made a series of program cuts to stress the department's priorities. In the budget there were some tough decisions made," Chu told Senators on the panel.

SKEPTICISM ON BUDGET

Chu got support from Democrats on the committee.

Chairman Jeff Bingaman, Democrat-New Mexico, said the priorities in the budget request addressed the right priorities, and showed fiscal restraint.

"I complement the secretary for successfully advocating for a budget that contains much that I support and I hope the Senate can fully fund many of the research and development initiatives proposed as well as that for the Energy Information Administration," Bingaman said.

Bingaman, however, joined Murkowski in questioning cuts to fossil-fuel research.

"We face a long period of transition from our dependence on fossil fuels, so continued research relating to advanced coal technologies, natural gas, and unconventional sources of fossil energy is a sensible part of an overall energy strategy," Bingaman said.

The hearing on the fiscal 2012 budget request comes as the House of Representatives considers a stopgap spending measure to fund the federal government from March 4 until the end of the 2011 fiscal year on September 30. Congress never passed a 2011 appropriations bill and is currently operating under a continuing resolution that funds the government at 2010 levels.

Some senators expressed skepticism that the budget request would be passed as written, including Republican Dan Coats from Indiana.

"I think the handwriting is on the wall that these numbers are not going to be there," Coats said. "My question to you is: Does the department have a plan B? A plan which is going to have to deal with a much lower."

Chu said if the full budget is not provided, his agencies has priorities and will "be glad to work with Congress."

Republican senators, including Murkowski, also criticized the administration for promoting specific energy technologies at the expense of others through its budget, and through a proposed "clean energy standard." The standard would mandate the use of technologies in electricity production that reduce greenhouse gas emissions, such as nuclear, renewable and natural gas power. Natural gas emits about half as much GHGs as coal, and the proposed CES recognizes that by giving it credit at only half the level of emission-free technologies such as solar.

"The question is, will it be a technology-neutral standard? ... But when you look at these budget categories, it seems to me that in the administration, you are picking those areas, through the budget process, that you would like to see enhanced," Murkowski said.

But Chu said that a CES would introduce market certainty for developers investing in new power projects.

"The clean energy standard is meant to be technology neutral, any technology will advance of using energy in a clean sustainable way is on the table," Chu said.

--Derek Sands, derek_sands@platts.com

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